TIDMVIC
RNS Number : 0478V
Victorian Plumbing Group plc
09 December 2021
Victorian Plumbing Group PLC
Full year results for the year ended 30 september 2021
Victorian Plumbing Group plc ('Victorian Plumbing', 'the
Group'), the UK's leading online specialist bathroom retailer,
announces its full year results for the year ended 30 September
2021 ('2021')
2021 2020 (restated)* Change
--------------------------- ---------- ----------------- -------
Revenue GBP268.8m GBP208.7m 29%
Gross profit margin(1) 49% 44% 5 ppts
Adjusted EBITDA(2) GBP40.1m GBP26.2m 53%
Adjusted EBITDA margin(3) 15% 13% 2 ppts
---------------------------- ---------- ----------------- -------
Financial highlights
-- Revenue up 29% to GBP268.8 million (2020*: GBP208.7 million)
-- Gross profit(4) up 42% to GBP130.5 million (2020*: GBP92.0
million) with a gross profit margin(1) of 49% (2020*: 44%)
-- Adjusted EBITDA(2) up 53% to GBP40.1 million (2020*: GBP26.2
million) with adjusted EBITDA margin(3) of 15% (2020*: 13%)
-- Operating cash flow(5) up 18% to GBP32.6 million (2020*:
GBP27.6 million). Operating cash conversion(6) of 81% (2020*:
105%)
-- After accounting for GBP9.4 million of exceptional costs
relating to the IPO in June 2021 and share-based payments of GBP7.7
million, profit before tax reduced by 17% to GBP19.7 million
(2020*: GBP23.7 million)
* Adjustments made to comparative figures previously reported
are detailed in note 2 and are as stated within the IPO Admission
document.
Operational highlights
-- Total orders(7) up 17% to 906,000 (2020: 776,000)
-- Active customers(8) up 13% to 638,000 (2020: 565,000)
-- Average order value(9) up 10% to GBP297 (2020: GBP269)
-- Marketing spend as a percentage of revenue increased
marginally to 26% (2020: 25%) with increased investment in more
focused digital performance-based marketing to complement offline
creative content
-- Trustpilot rating(10) remains 'Excellent' with an average
score of 4.3 across the year (2020: 4.3)
-- We introduced enhanced point-of-sale functionality to support
customer purchasing decisions, adding realistic CGI imagery and 360
degree product views, more detailed product descriptions, and
upgraded interaction with our consumer finance partner
Outlook
As we reported in our full year trading update on 7 October
2021, we experienced more subdued market conditions during the
summer months following the easing of restrictions, before customer
demand improved somewhat during September.
Through the first two months of FY22, whilst consumers have
continued to spend more on leisure and less on big ticket material
homeware purchases, demand and revenue have been broadly the same
as last year and 41% ahead of FY20.
The adaptability of our supply chain and investment in-stock
inventory means we are currently operating from a position of
strength relative to others. Given the popularity of our own brand
offering, we are able to absorb most of the current supply chain
pressures. However, as we look to balance revenue growth with
profitability in the short-term, gross margins may move closer to
those achieved in FY20.
As we move through this changing consumer environment, we are
being even more aggressive on our marketing approach to further
increase our market share in line with our long-term growth
ambitions.
We continue to be focused on our long-term goals and to make
progress on all of our strategic areas and we are confident of the
future growth prospects of the Group .
Mark Radcliffe, Founder and Chief Executive Officer of Victorian
Plumbing Group plc, said:
"This has been a milestone year for Victorian Plumbing as we
accelerated our growth, supported by the continued dedication and
agility of colleagues around the business, and successfully
completed our listing on the London Stock Exchange. Our distinctive
brand and extensive choice of quality bathroom products have been
key drivers in attracting consumers to our platform, whilst the
strength of our supply chain and our investment in inventory means
that the majority of our products have remained immediately
available.
"Although the short-term outlook is difficult to predict as the
world normalises from the events of the last two years, it is
inevitable that consumer buying behaviour will continue to move
online. As the UK's largest online bathroom specialist retailer,
Victorian Plumbing is uniquely placed to help consumers obtain
exactly what they need for their dream bathroom.
"The Board remains confident in the medium to long-term growth
prospects for Victorian Plumbing."
Analyst presentation
A presentation for analysts will be held virtually at 8:15am,
Thursday 9 December 2021. If you wish to attend, please contact FTI
Consulting via VictorianPlumbing@fticonsulting.com .
For further information please contact:
Victorian Plumbing Group plc via FTI Consulting
Mark Radcliffe, Chief Executive Officer +44 20 3727 1000
Paul Meehan, Chief Financial Officer
Richard Monaghan, Director of Finance
FTI Consulting (Financial PR) +44 20 3727 1000
Alex Beagley VictorianPlumbing@fticonsulting.com
Eleanor Purdon
Sam Macpherson
Houlihan Lokey UK Limited (Nominated Adviser and
Financial Adviser)
Sam Fuller
Paul Lines +44 20 7484 4040
About Victorian Plumbing
Victorian Plumbing is the UK's leading online retailer of
bathroom products and accessories, offering a wide range of over
24,000 products to B2C and trade customers. Victorian Plumbing
offers its customers a one-stop shop solution for the entire
bathroom with more than 125 own and third-party brands across a
wide spectrum of price points.
The Group's product design and supply chain strengths are
complemented by its creative and brand-focused marketing strategy,
which predominantly focuses on online channels to drive significant
and growing traffic to its website.
Headquartered in Skelmersdale, Lancashire, the Group employs
over 500 staff across seven locations in Skelmersdale, Manchester
and Birmingham.
For more information, please visit
https://www.victorianplumbingplc.com/about-us/
Cautionary statement
This announcement of annual results does not constitute or form
part of and should not be construed as an invitation to underwrite,
subscribe for, or otherwise acquire or dispose of any Victorian
Plumbing Group plc (the "Company") shares or other securities in
any jurisdiction nor is it an inducement to enter into investment
activity nor should it form the basis of or be relied on in
connection with any contract or commitment or investment decision
whatsoever. It does not constitute a recommendation regarding any
securities. Past performance, including the price at which the
Company's securities have been bought or sold in the past, is no
guide to future performance and persons needing advice should
consult an independent financial advisor. This announcement may
include statements that are, or may be deemed to be,
"forward-looking statements" (including words such as "believe",
"expect", "estimate", "intend", "anticipate" and words of similar
meaning). By their nature, forward-looking statements involve risk
and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
Summary of performance
Units 2021 2020 (restated)* Change
----------------------------------- ----------- ------ ----------------- -----------
Income statement
----------------------------------- ----------- ------ ----------------- -----------
Revenue GBPm 268.8 208.7 29%*
----------------------------------- ----------- ------ ----------------- -----------
Gross profit(4) GBPm 130.5 92.0 42%*
----------------------------------- ----------- ------ ----------------- -----------
Gross profit margin(1) % 49% 44% 5%pts*
----------------------------------- ----------- ------ ----------------- -----------
Adjusted EBITDA(2) GBPm 40.1 26.2 53%*
----------------------------------- ----------- ------ ----------------- -----------
Adjusted EBITDA margin(3) % 15% 13% 2%pts*
----------------------------------- ----------- ------ ----------------- -----------
Profit before tax GBPm 19.7 23.7 (17%)*
----------------------------------- ----------- ------ ----------------- -----------
Earnings per share
----------------------------------- ----------- ------ ----------------- -----------
Basic earnings per share pence 5.3 7.4 (28%)*
----------------------------------- ----------- ------ ----------------- -----------
Adjusted basic earnings per share pence 11.0 7.4 49%*
----------------------------------- ----------- ------ ----------------- -----------
Cash flow
----------------------------------- ----------- ------ ----------------- -----------
Operating cash flow(5) GBPm 32.6 27.6 18%*
----------------------------------- ----------- ------ ----------------- -----------
Cash conversion(6) % 81% 105% (24%pts) *
----------------------------------- ----------- ------ ----------------- -----------
Net cash and cash equivalents GBPm 32.7 10.5
----------------------------------- ----------- ------ ----------------- -----------
Key performance indicators
----------------------------------- ----------- ------ ----------------- -----------
Total orders(7) '000 906 776 17%
----------------------------------- ----------- ------ ----------------- -----------
Active customers(8) '000 638 565 13%
----------------------------------- ----------- ------ ----------------- -----------
Average order value(9) GBP 297 269 10%
----------------------------------- ----------- ------ ----------------- -----------
Average Trustpilot rating(10) Score / 5 4.3 4.3 -
----------------------------------- ----------- ------ ----------------- -----------
Marketing spend as a % of revenue % 26% 25% 1%pt
----------------------------------- ----------- ------ ----------------- -----------
(1) Gross profit margin is defined as Gross profit as a percentage of revenue.
(2) Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is
operating profit before depreciation, amortisation, exceptional
items and IFRS 2 share-based payments along with associated
national insurance.
(3) Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of revenue.
(4) Gross profit is defined as revenue less cost of sales. Cost
of sales includes all direct costs incurred in purchasing products
for resale along with packaging, distribution and transaction
costs.
(5) Operating cash flow is cash generated from operating
activities before exceptional items and taxation less capital
expenditure and cash flows relating to leases.
(6) Cash conversion is operating cash flow as a percentage of adjusted EBITDA.
(7) Total orders is defined as the total number of orders
dispatched to customers in the year.
(8) Active customers is the number of unique customers who placed an order in the year.
(9) Average order value is defined as revenue divided by total orders in the year.
(10) The average Trustpilot rating is defined as the monthly
average of all ratings made through Trustpilot.
* Adjustments made to comparative figures previously reported
are detailed in note 2 and were detailed within the IPO Admission
document.
Summary of FY21 operating performance
Our operating results reflect another excellent year for the
business. Revenue grew by 29% to GBP268.8m (2020*: GBP208.7
million) as both total orders and the average order value
increased. Adjusted EBITDA(1) increased by 53% to GBP40.1 million
(2020*: GBP26.2 million) and adjusted EBITDA margin increased to
15% (2020*: 13%).
We have strengthened our position as the UK's largest online
bathroom specialist and we have deepened our competitive moat over
the past year. The bold, distinctive and quirky Victorian Plumbing
brand continues to be well received by consumers. We have
complemented our creative offline content by investing in more
focused digital performance-based marketing. This ongoing and
relentless marketing strategy has led to an increase in brand
awareness, which reached 64% in the year(2) , up from 58% in
2020.
As an e-commerce retailer, we have undoubtedly benefitted during
the pandemic from an acceleration in the ongoing structural shift
in consumer buying behaviour from offline to online. Despite this,
online sales of bathroom products and accessories remains at only
29% of the total UK market according to Mintel. We expect our
addressable market to grow even further in the coming years.
Audience, defined as the number of unique visitors visiting our
platform measured through Google Analytics, increased by 15% to
2.59 million on average each month (2020: 2.26 million) which was
1.9 times larger than our nearest competitor(3) (2020: 2.0
times).
Total orders increased by 17% to 906,000 in the year (2020:
776,000) as customers continue to appreciate the quality of our
products and our brand. Active customers increased by 13% to
638,000 (2020: 565,000).
A one-stop shop for bathroom products and accessories
Customers can use our platform to browse an extensive choice of
quality products across a wide range of price points, meaning
Victorian Plumbing offers customers a one-stop solution for
bathrooms. During the year, we increased consumer choice to more
than 24,000 products from over 125 brands, including strategic
additions of two well known third-party brands: Duravit and
Villeroy & Boch. This unrivalled product range increases the
likelihood that consumers can find the product which is right for
them and also reduces the impact of any stock-outs as popular
products can be easily substituted.
The Victorian Plumbing website is the only place that customers
can purchase products from our stable of own brands. We have now
developed over 20 brands using our in-house development team and
these continue to be extremely popular with consumers. In the year
ended 30 September 2021, 76% of revenue (2020: 75%) was generated
from own brand products.
Agile supply chain
We have not been exempt from disruption caused by Covid-19.
Global supply chains have been challenged throughout the year,
causing many retailers across every industry to experience slow
deliveries, stock shortages and increased costs.
Over the past 20 years, we have developed long-standing
relationships with our global supplier base. This reliable and
agile supply chain has been invaluable in providing our product
team with the necessary transparency and flexibility over the past
12 months. At various points in the year, including the latter few
months of the financial year, we increased our stock holding to
ensure that when supply chains were at their most disrupted we
could service consumer demand. By taking this approach, we were
able to be bold in attracting consumers when our competitors were
experiencing stock shortages, therefore increasing our market
share.
Seamless customer journey
The experience that customers have with us is always front of
mind. We continue to be ranked 'Excellent' by Trustpilot, with an
average score of 4.3 (2020: 4.3) across over 27,500 reviews
received from consumers over the past year.
Our convenient and intuitive website provides a seamless, fully
digital journey from homepage to payment. In the year we have
enhanced our product pages with realistic CGI imagery and 360
degree product views whilst simultaneously improving product
information. We also upgraded our integration with our consumer
finance partner to provide consumers with near real-time decisions
on whether they can obtain credit for their purchases.
Bathroom upgrades are often considered important decisions for
consumers, and we know from customer feedback that many appreciate
guidance through their purchasing journey. We therefore increased
the level of assistance offered to customers as they browse by
improving our AI-powered chatbot, or where necessary, linking
consumers through to a member of our customer services team.
Our data-driven approach
Our bespoke, scalable e-commerce platform comprises
built-for-purpose inventory, enterprise resource planning and
customer relationship management systems to provide real-time data
to various teams and functions within the business.
We have continued to develop our platform in the year and have
grown our technology and infrastructure team to facilitate this. We
recognise that to remain best in class there is a need to
continually develop. It is because of this need to evolve that we
are in the process of developing a new platform which will allow
for further enhancements to the customer experience.
Our strategic focus
Our strategy has been developed with reference to three
commercial growth horizons covering: core B2C, trade, and adjacent
products.
Our core market is retailing bathroom products and accessories
to consumers in the UK through our online platform. The Covid-19
pandemic has shifted consumers' buying behaviour online for
bathroom products and accessories, and we believe that there is
still some way to go before this transition reaches maturity. We
are well placed to continue to gain market share in the short term
through both these structural tailwinds and by taking share from
traditional physical retailers and other online competitors by
leveraging our market and brand position.
In the medium term we remain encouraged that, with strategic
planning and execution, there is a valuable further opportunity to
translate our domestic success into carefully selected
international market expansions.
Our second horizon focuses on the opportunity to retail bathroom
products and accessories to the trade, an area in which we are
currently underpenetrated. In the year ended 30 September 2021,
just 16% of our revenue came from trade accounts, compared with an
estimated 30-40% of the market. The Victorian Plumbing brand has
largely been consumer-focused, with the trade element of the market
being secondary in any of our marketing or initiatives. By
broadening our marketing approach, expanding our focus to provide
relevant products to trade customers and providing the best
platform on which to browse and order, we believe we can make
meaningful gains in this area.
Finally, our third horizon focuses on adjacent products that
consumers look for when renovating a bathroom. Given our position
in the bathroom product and accessories market, we have an exciting
opportunity to expand our reach into products that often come later
in the buying journey, such as tiles and lighting. Expanding these
adjacent product ranges and increasing their prominence on our
website will allow consumers to use Victorian Plumbing for
everything they need to complete their bathrooms.
ESG
Taking 'responsibility' is one of our core values, and every one
of us has a role to play in making a difference to the environment
and the communities in which we operate. During the year we
established our ESG strategy, which is centred around three
pillars: governance and ethics, diversity and inclusion, and
environmental sustainability. Initiatives undertaken within each
area this year include supplier audits, the employer engagement
survey, and partnering with a waste management provider.
We recognise that we have a lot of work to do against each of
these areas in the months and years to come.
Our people
We are proud of the values-led, principles-driven culture that
we have and it is this culture that underpins our ability to adapt
to change in all circumstances. The past year has presented
challenges for many colleagues, but we are immensely proud of how
everyone in the business has supported each other throughout this
period. It is a testament to the hard work, dedication and ability
of the people we work with every day that our business has been
able to navigate the past 12 months with such success.
We would like to thank our people, our customers, our suppliers
and other stakeholders for their support this year and in the year
ahead. These are still challenging times for all, but we feel well
placed to carry on pursuing the multiple opportunities ahead of us
in a way that is both ambitious and responsible.
(1) Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is
operating profit before depreciation, amortisation, exceptional
items and IFRS 2 share-based payments along with associated
national insurance.
(2) YouGov prompted brand awareness - February 2021. Comparative as of February 2020
(3) SimiliarWeb - average unique visitors per month
Financial review
We are pleased to report a successful year, growing revenue,
gross margin and adjusted EBITDA margin whilst also increasing net
cash. This has been achieved in a year of rapid change for the
Group and through a period when we have had to overcome the
challenges presented by Covid-19 and disruption to global supply
chains.
2020* Change
2021 (restated) %
GBPm GBPm
------------------------------- -------- ------------ -------
Revenue 268.8 208.7 29%
Cost of sales (138.3) (116.7) (19%)
------------------------------- -------- ------------ -------
Gross profit 130.5 92.0 42%
Underlying costs (90.4) (66.0) (37%)
Other operating income - 0.2 (100%)
------------------------------- -------- ------------ -------
Adjusted EBITDA 40.1 26.2 53%
Depreciation and amortisation (3.0) (2.2) (36%)
Share-based payments (7.7) - n.m.
Exceptional items (9.4) - n.m.
------------------------------- -------- ------------ -------
Operating profit 20.0 24.0 (17%)
------------------------------- -------- ------------ -------
* Adjustments made to comparative figures previously reported
are detailed in note 2 and were detailed within the IPO Admission
document.
Revenue
In 2021, revenue grew by 29% to GBP268.8 million (2020*:
GBP208.7 million) through an increase in both total orders and
average order value.
The change in consumer buying behaviour towards online channels
has accelerated during the Covid-19 pandemic and the Group has
capitalised on the opportunity to serve customers through this
structural long-term shift. Total orders in the year increased by
17% to 906,000 (2020: 776,000) as we grew our active customer base
by 13% to 638,000 (2020: 565,000).
Average order value ('AOV') increased by 10% to GBP297 (2020:
GBP269). The majority of this increase resulted from an uplift in
prices. As the popularity of our own brand products has grown, the
Group has been able to increase the prices of these products to
reflect the customers' perception of value. These price increases
were further supported by high demand for bathroom products
overall, coupled with tightened supply resulting from disruption in
global supply chains. The Group generated 76% of revenue from own
brand products in the year (2020: 75%).
Gross profit
Gross profit increased by 42% to GBP130.5 million (2020*:
GBP92.0 million) and gross profit margin increased by five
percentage points to 49% (2020: 44%). We define gross profit as
revenue less cost of sales. Cost of sales includes all direct costs
incurred in purchasing products for resale along with packaging,
distribution and transaction costs.
Cost of sales increased by 19% to GBP138.3 million (2020*:
GBP116.7 million) primarily as sales volumes increased. The
disruption caused by Covid-19 impacted our supply chain throughout
the year, causing increases in the cost of raw materials, transport
and packaging. The strength of the Group's supplier relationships
and the agility of our team ensured robust sourcing processes for
good product availability. Furthermore, the pricing power of the
Group, particularly on own brand products, allowed us to increase
prices to protect gross margin.
Gross margin from own brand products increased to 53% (2020:
49%), whilst gross margin from third-party products increased to
33% for the year (2020: 30%).
Underlying costs
Underlying costs, which we define as administrative expenses
before depreciation and amortisation, exceptional items and
share-based payments, increased by 37% to GBP90.4 million (2020*:
GBP66.0 million).
2020* Change
2021 (restated) %
GBPm GBPm
--------------------------------------------- ------- ------------ -------
Marketing costs 69.7 52.2 34%
People costs excluding share-based payments 13.8 9.4 47%
Property costs 4.1 2.6 58%
Other overheads 2.8 1.8 56%
--------------------------------------------- ------- ------------ -------
Underlying costs 90.4 66.0 37%
--------------------------------------------- ------- ------------ -------
Growing our brand awareness and increasing traffic to our site
remains a focus for the Group. Marketing costs increased by 34% to
GBP69.7 million (2020*: GBP52.2 million) which resulted in a
marginal increase in marketing costs as a percentage of revenue to
26% (2020: 25%).
People costs, excluding share-based payments but including costs
relating to agency staff and contractors, increased by 47% to
GBP13.8 million (2020*: GBP9.4 million). This was mostly as a
result of an increased number of full-time equivalent employees
('FTEs') in demand-based roles relating to customer service and
warehouse operations. Total FTEs increased by 44% year on year to
532 (2020: 369). Property costs increased by 58% to GBP4.1 million
(2020: GBP2.6 million). The majority of this increase was as a
result of the Group increasing its warehouse capacity on a
short-term basis. Other overheads increased by 56% to GBP2.8
million (2020*: GBP1.8 million).
Other operating income
Other operating income for the year was GBPnil (2020*: GBP0.2
million). During the 2021 financial year the Group repaid GBP0.1
million of amounts claimed under the Coronavirus Job Retention
Scheme. This amount was originally recognised within other
operating income in 2020.
Adjusted EBITDA
Significant items of income and expense that do not relate to
the trading of the Group are disclosed separately. Examples of such
items are exceptional items and share-based payment charges, as
these primarily relate to the changing ownership of the Group.
The table below provides a reconciliation from operating profit
to adjusted EBITDA, which is a non-GAAP metric used by the Group to
assess the operating performance.
2020* Change
2021 (restated) %
GBPm GBPm
------------------------------------------------ ------- ------------ -------
Operating profit 20.0 24.0 (17%)
Share-based payments (including associated NI) 7.7 - n.m.
Exceptional items 9.4 - n.m.
------------------------------------------------ ------- ------------ -------
Adjusted operating profit 37.1 24.0 55%
Depreciation and amortisation 3.0 2.2 36%
Adjusted EBITDA 40.1 26.2 53%
------------------------------------------------ ------- ------------ -------
Adjusted EBITDA increased by 53% to GBP40.1 million (2020*:
GBP26.2 million) and adjusted EBITDA margin increased by two
percentage points to 15% (2020*: 13%).
Exceptional items
Total fees incurred in relation to the IPO were GBP9.8 million,
of which GBP9.4 million has been expensed through the income
statement as an exceptional item, with the balance of GBP0.4
million being charged to the share premium account.
Share-based payments
The Group incurred share-based payment charges (including
associated NI) of GBP7.7 million (2020: GBPnil). The majority of
the charge recognised relates to shares awarded to management to
incentivise a change in ownership such as the IPO that occurred in
June 2021.
Depreciation and amortisation
Depreciation and amortisation increased by GBP0.8 million to
GBP3.0 million (2020: GBP2.2 million). The Group continues to
invest in its platform and bespoke inventory management systems,
with GBP1.8 million capitalised during the 2021 financial year
(2020: GBP2.0 million). The increased investment in this area over
the last two years has resulted in an increase in the amortisation
charge.
Operating profit
Operating profit decreased by 17% to GBP20.0 million (2020*:
GBP24.0 million). Operating profit margin decreased by four
percentage points to 7% (2020: 11%).
Profit before taxation
Profit before taxation decreased by 17% to GBP19.7 million
(2020: GBP23.7 million). This decrease results from the operating
profit performance while net finance costs remained flat at GBP0.3
million (2020: GBP0.3 million). Interest charged on the Group's
lease arrangements under IFRS 16 increased to GBP0.3 million (2020:
GBP0.2 million).
In June 2021 the Group signed into a new revolving credit
facility (the 'RCF') with HSBC. The RCF has a total commitment of
GBP10.0 million and a termination date of June 2024. The facility
remained undrawn throughout the financial year.
Taxation
The Group tax charge of GBP5.4 million (2020*: GBP4.0 million)
represents an effective tax rate of 27% (2020: 18%), which is
higher than the standard rate of tax primarily due to the level of
non-deductible exceptional items relating to the IPO.
Earnings per share
Basic earnings per share ('EPS') from continuing operations,
which is calculated for both the current and comparative year based
upon the weighted average number of shares in issue immediately
prior to the IPO, was 5.3 pence per share (2020*: 7.4 pence per
share).
The adjusted basic earnings per share from continuing operations
increased by 49% to 11.0 pence per share (2020*: 7.4 pence per
share). The table shows the effect on the Group's basic earnings
per share of the exceptional items and share-based payments.
2021 2020* (restated) Change
GBPm GBPm %
--------------------------------------------------------------------- ------ ----------------- -------
Profit for EPS 14.3 19.7 (27%)
Share-based payments (including associated NI) 7.7 - n.m.
Exceptional items 9.4 - n.m.
Tax effect (1.9) - n.m.
--------------------------------------------------------------------- ------ ----------------- -------
Adjusted profit for EPS 29.5 19.7 50%
--------------------------------------------------------------------- ------ ----------------- -------
Weighted average number of ordinary shares for basic EPS (millions) 267.8 265.6 1%
--------------------------------------------------------------------- ------ ----------------- -------
Adjusted earnings per share (pence) 11.0 7.4 49%
--------------------------------------------------------------------- ------ ----------------- -------
Cash flow and net cash
2020* (restated)
2021 GBPm
GBPm
----------------------------- ------- -----------------
Adjusted EBITDA 40.1 26.2
Movement in working capital (3.2) 4.7
Capital expenditure (3.2) (2.6)
Lease payments - principal (0.8) (0.5)
Lease payments - interest (0.3) (0.2)
----------------------------- ------- -----------------
Operating cash flow 32.6 27.6
----------------------------- ------- -----------------
Cash conversion 81% 105%
----------------------------- ------- -----------------
The Group continues to see strong cash generation with operating
cash flow 18% higher at GBP32.6 million (2020*: GBP27.6 million),
resulting in cash conversion of 81% (2020*: 105%).
Changes in working capital resulted in a cash outflow of GBP3.2
million in the year. Global supply chains were disrupted for a
number of months in the year for a combination of reasons, most
notably the pandemic. As a result, we made the decision to increase
our stock holding to decrease the risk of stock-outs, therefore
providing a better and more dependable experience for customers.
This increase in stock holding across the year end resulted in a
working capital outflow of GBP9.4 million. This was offset
partially by an increase in creditors, which resulted in a net cash
inflow of GBP7.3 million.
Capital expenditure of GBP3.2 million (2020: GBP2.6 million)
included GBP1.2 million of capitalised salaries relating to
development of the Group's platform and bespoke inventory
management systems (2020: GBP0.6 million). At the year end the
Group had net cash of GBP32.7 million (2020: GBP10.5 million).
Events after the reporting period
There have been no material events to report after the end of
the reporting period.
Prior year adjustments
As detailed in note 2, following a review of the Group's
historical financial information for the Group's IPO in June 2021,
a number of adjustments have been made to correct previously
reported figures within the Group's statutory consolidated
financial statements. These adjustments have been corrected by
restating each of the affected financial statement line items for
the prior period. These adjustments were detailed within the
Admission document.
Dividend
No final dividend for the year ended 30 September 2021 has been
declared. The current intention of the Board is to pay a dividend
in relation to the financial year ending 30 September 2022.
Mark Radcliffe Paul Meehan
Chief Executive Officer Chief Financial Officer
9 December 2021 9 December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2021
2020
2021 (restated)
Note GBPm GBPm
----------------------------------------------------------- ----- -------- ------------
Revenue 4 268.8 208.7
Cost of sales (138.3) (116.7)
----------------------------------------------------------- ----- -------- ------------
Gross profit 130.5 92.0
Administrative expenses before separately disclosed items 5 (93.4) (68.2)
Other operating income - 0.2
----------------------------------------------------------- ----- -------- ------------
Adjusted operating profit 37.1 24.0
Separately disclosed items:
Share-based payments 19 (7.7) -
Exceptional items 6 (9.4) -
Operating profit 5 20.0 24.0
Finance costs (0.3) (0.3)
----------------------------------------------------------- ----- -------- ------------
Profit before tax 19.7 23.7
Income tax expense 7 (5.4) (4.0)
----------------------------------------------------------- ----- -------- ------------
Profit for the year 14.3 19.7
----------------------------------------------------------- ----- -------- ------------
Basic earnings per share (pence) 9 5.3 7.4
Diluted earnings per share (pence) 9 4.5 7.4
----------------------------------------------------------- ----- -------- ------------
All amounts relate to continuing operations.
There are no items to be recognised in the statement of
comprehensive income and hence, the Group has not presented a
separate statement of other comprehensive income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 SEPTEMBER 2021
2020 As at 1 Oct 2019 (restated)
2021 (restated) GBPm
Note GBPm GBPm
-------------------------------------------------- ----- -------- ------------ ----------------------------
Assets
Non-current assets
Intangible assets 10 2.7 2.5 1.8
Property, plant and equipment 11 1.7 0.8 0.5
Right-of-use assets 12 5.3 6.0 3.5
9.7 9.3 5.8
Current assets
Inventories 32.4 23.0 18.3
Trade and other receivables 13 4.9 10.0 5.2
Tax recoverable 1.0 2.3 -
Cash and cash equivalents 32.7 10.5 2.7
-------------------------------------------------- ----- -------- ------------ ----------------------------
71.0 45.8 26.2
-------------------------------------------------- ----- -------- ------------ ----------------------------
Total assets 80.7 55.1 32.0
-------------------------------------------------- ----- -------- ------------ ----------------------------
Equity and liabilities
Equity attributable to the owners of the Company
Share capital 17 0.3 - -
Share premium 11.2 - -
Capital redemption reserve 0.1 - -
Capital reorganisation reserve (320.6) - -
Retained earnings 339.8 13.0 2.8
-------------------------------------------------- ----- -------- ------------ ----------------------------
Total equity 30.8 13.0 2.8
-------------------------------------------------- ----- -------- ------------ ----------------------------
Liabilities
Non-current liabilities
Lease liabilities 15 4.9 5.7 3.3
Deferred taxation liability 0.1 0.1 -
-------------------------------------------------- ----- -------- ------------ ----------------------------
5.0 5.8 3.3
Current liabilities
Trade and other payables 14 36.0 28.1 21.2
Contract liabilities 7.9 7.3 3.8
Lease liabilities 15 0.9 0.7 0.5
Provisions 0.1 0.2 0.1
Corporation tax - - 0.3
-------------------------------------------------- ----- -------- ------------ ----------------------------
44.9 36.3 25.9
-------------------------------------------------- ----- -------- ------------ ----------------------------
Total liabilities 49.9 42.1 29.2
-------------------------------------------------- ----- -------- ------------ ----------------------------
Total equity and liabilities 80.7 55.1 32.0
-------------------------------------------------- ----- -------- ------------ ----------------------------
The financial statements were approved by the Board of Directors
on 9 December 2021 and authorised for issue.
Paul Meehan
Chief Financial Officer
Victorian Plumbing Group plc
Registered number: 13379554
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2021
Capital
reorganisation Share-based Retained
Share capital Share premium reserve payment reserve earnings Total equity
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------------- -------------- ---------------- ---------------- ---------------- -------------
Balance at 1
October 2019 - - - - 4.7 4.7
Impact of prior
year
restatement
(note 2) - - - - (1.9) (1.9)
Balance at 1
October 2019
(restated) - - - - 2.8 2.8
Comprehensive
income
Profit for the
year - - - - 19.7 19.7
Transactions
with owners
Dividends paid
(note 8) - - - - (9.5) (9.5)
Balance at 30
September 2020
(restated) - - - - 13.0 13.0
----------------- -------------- -------------- ---------------- ---------------- ---------------- -------------
Comprehensive
income
Profit for the
year - - - - 14.3 14.3
Transactions
with owners
Employee share
schemes - value
of employee
services (note
19) - - - - 6.5 6.5
Tax impact of
employee share
schemes - - - - 0.7 0.7
Capital
transaction -
Group
restructure,
share-for-share
exchange and
issue of
Victorian
Plumbing
Group plc
shares (note
17) 0.3 11.2 (320.6) 0.1 320.2 11.2
Dividends paid
on ordinary
shares (note 8) - - - - (14.9) (14.9)
----------------- -------------- -------------- ---------------- ---------------- ---------------- -------------
Total
transactions
with owners
recognised
directly in
equity 0.3 11.2 (320.6) 0.1 312.5 3.5
----------------- -------------- -------------- ---------------- ---------------- ---------------- -------------
Balance at 30
September 2021 0.3 11.2 (320.6) 0.1 339.8 30.8
----------------- -------------- -------------- ---------------- ---------------- ---------------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 SEPTEMBER 2021
2020
2021 (restated)
Note GBPm GBPm
---------------------------------------------- ----- ------- ------------
Cash flows from operating activities
Cash generated from operating activities
before exceptional operating items 36.9 30.9
Cash outflow from exceptional operating (9.1) -
items
---------------------------------------------- ----- ------- ------------
Cash generated from operating activities 20 27.8 30.9
Income tax paid (3.4) (6.5)
---------------------------------------------- ----- ------- ------------
Net cash generated from operating activities 24.4 24.4
Cash flows from investing activities
Purchase of intangible assets 10 (1.8) (2.0)
Purchase of property, plant and equipment 11 (1.4) (0.6)
Amounts received/(paid) in respect of
related party loans 5.9 (3.8)
Net cash generated by/(used in) investing
activities 2.7 (6.4)
Cash flows from financing activities
Dividends paid 8 (14.9) (9.5)
Finance arrangement fees 16 (0.1) -
Proceeds from the issue of shares, net
of costs 17 11.2 -
Payment of interest portion of lease
liabilities 15 (0.3) (0.2)
Payment of principal portion of lease
liabilities 15 (0.8) (0.5)
---------------------------------------------- ----- ------- ------------
Net cash used in financing activities (4.9) (10.2)
Net increase in cash and cash equivalents 22.2 7.8
Cash and cash equivalents at the beginning
of the year 10.5 2.7
Cash and cash equivalents at the end
of the year 32.7 10.5
---------------------------------------------- ----- ------- ------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Basis of preparation
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, and in accordance
with international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/202 as it applies in the European
Union.
The following amendments to standards have been adopted by the
Group for the first time for the financial year beginning on 1
April 2020:
-- Amendments to References to Conceptual Framework in IFRS Standards;
-- Definition of a Business - Amendments to IFRS 3;
-- Definition of Material - Amendments to IAS 1 and IAS 8; and
-- Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7.
The adoption of these amendments has had no material effect on
the Group's consolidated financial statements. There are a number
of amendments to IFRS that have been issued by the IASB that become
mandatory in a subsequent accounting period including: COVID-19
Related Rent Concessions - Amendment to IFRS 16 and Interest Rate
Benchmark Reform Phase 2 - Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16. The Group has evaluated these changes and none
are expected to have a significant impact on these consolidated
financial statements.
The consolidated financial statements have been prepared on the
going concern basis and under the historical cost convention.
On 27 May 2021, the Company obtained control of the entire share
capital of VIPSO Limited via a share-for-share exchange. There were
no changes in rights or proportion of control exercised as a result
of this transaction. Although the share-for-share exchange resulted
in a change of legal ownership, this was a common control
transaction and therefore outside the scope of IFRS 3. In substance
these financial statements reflect the continuation of the
pre-existing Group, headed by VIPSO Limited, and the financial
statements have been prepared applying the principles of
predecessor accounting ownership. This was a common control
transaction and therefore outside the scope of IFRS 3.
As a result of the above, the comparatives presented in these
financial statements are the consolidated results of VIPSO Limited.
The prior year statement of financial position reflects the share
capital structure of VIPSO Limited. The current period balance
sheet presents the legal change in ownership of the Group,
including the share capital of Victorian Plumbing Group plc and the
capital reorganisation reserve arising as a result of the
share-for-share exchange transaction. The consolidated statement of
changes in equity and the additional disclosures in note 17 explain
the impact of the share-for-share exchange in more detail.
The financial information set out in this document does not
constitute the statutory accounts of the Group for the financial
years ended 30 September 2021 or 30 September 2020 but is derived
from the 2021 Annual Report and Financial Statements. The Annual
Report and Financial Statements for 2021 will be delivered to the
Registrar of Companies in due course. The auditors have reported on
those accounts and have given an unqualified report, which does not
contain a statement under Section 498 of the Companies Act
2006.
Going concern
The Group's ability to continue as a going concern is dependent
on maintaining adequate levels of resources to continue to operate
for the foreseeable future. When assessing the going concern of the
Group, the Directors have reviewed the year to date financial
results, as well as detailed financial forecasts for the period up
to 31 December 2022. The assumptions used in the financial
forecasts are based on the Group's historical performance and
management's extensive experience of the industry. Taking into
consideration the wider economic environment, the forecasts have
been assessed and stress tested to ensure that a robust assessment
of the Group's working capital and cash requirements has been
performed.
The Group has sufficient liquidity headroom through the forecast
period. The Directors therefore have reasonable expectation that
the Group has the financial resources to enable it to continue in
operational existence for the period to 31 December 2022.
Accordingly, the Directors conclude it is appropriate that these
consolidated financial statements be prepared on a going concern
basis.
2. Accounting policies, estimates and judgements
The accounting policies applied by the Group in these
consolidated financial statements are the same as those applied by
the Group in its consolidated financial statements as at and for
the year ended 30 September 2020 unless stated below.
Restatement of prior year comparatives
Following a review of the Group's historical financial
information for the Group's IPO in June 2021, a number of
adjustments have been made to correct errors in balances previously
reported within the Group's consolidated financial statements.
These adjustments have been corrected by restating each of the
affected financial statement line items for the prior period as
follows. The Group's statement of cash flows was not impacted.
Reconciliation of equity and total comprehensive income as at 30
September 2020
Statement of financial position as at 30 September 2020
Restated 30 September
Previously reported 30 Impact of adjustments 2020
Notes September 2020 GBPm GBPm GBPm
--------------------------- --------- -------------------------- ---------------------- --------------------------
Non-current assets
Intangible assets A 2.3 0.2 2.5
Property, plant and equipment 0.8 - 0.8
Right-of-use assets B 2.9 3.1 6.0
6.0 3.3 9.3
Current assets
Inventories C, D, E 24.0 (1.0) 23.0
Trade and other
receivables F, G 9.4 0.6 10.0
Tax recoverable K 1.4 0.9 2.3
Cash and cash equivalents 10.5 - 10.5
-------------------------------------- -------------------------- ---------------------- --------------------------
45.3 0.5 45.8
------------------------------------- -------------------------- ---------------------- --------------------------
Current liabilities
Trade and other payables D, G (26.7) (1.4) (28.1)
Provision H - (0.2) (0.2)
Contract liability C, F (4.7) (2.6) (7.3)
Lease liabilities B (0.5) (0.2) (0.7)
(31.9) (4.4) (36.3)
------------------------------------- -------------------------- ---------------------- --------------------------
Non-current liabilities
Lease liabilities B (2.7) (3.0) (5.7)
Deferred taxation liabilities (0.1) - (0.1)
-------------------------------------- -------------------------- ---------------------- --------------------------
(2.8) (3.0) (5.8)
Net assets 16.6 (3.6) 13.0
-------------------------------------- -------------------------- ---------------------- --------------------------
Equity attributable to the
owners of the Company
Share capital - - -
Retained earnings 16.6 (3.6) 13.0
Total equity 16.6 (3.6) 13.0
-------------------------------------- -------------------------- ---------------------- --------------------------
Statement of total comprehensive income year ended 30 September
2020
Restated 30 September
Previously reported 30 Impact of adjustments 2020
Notes September 2020 GBPm GBPm GBPm
------------------------ ------------------ ----------------------- ---------------------- -----------------------
Revenue C, G, I 209.9 (1.2) 208.7
Cost of sales C, D, E, G, H, J (167.7) 51.0 (116.7)
------------------------ ------------------ ----------------------- ---------------------- -----------------------
Gross profit 42.2 49.8 92.0
Administrative expenses A, B, J (16.2) (52.0) (68.2)
Other operating income I 0.1 0.1 0.2
------------------------ ------------------ ----------------------- ---------------------- -----------------------
Operating profit 26.1 (2.1) 24.0
Finance costs B (0.2) (0.1) (0.3)
------------------------ ------------------ ----------------------- ---------------------- -----------------------
Profit before tax 25.9 (2.2) 23.7
Tax on profit (4.5) 0.5 (4.0)
-------------------------------------------- ----------------------- ---------------------- -----------------------
Profit for the financial year 21.4 (1.7) 19.7
-------------------------------------------- ----------------------- ---------------------- -----------------------
A Intangible assets
The Group has intangible assets relating to purchased software
and internal capitalised development spend. On review, the Group
recorded amortisation in the year ended 30 September 2020 in excess
of what was required as per the Group's amortisation policy. An
adjustment has been included to increase the level of intangible
assets by GBP0.2 million and reduce the amount of amortisation
included within administrative expenses.
B Recognition of a lease under IFRS 16
During the year, the Group agreed the terms to lease warehouse
and office space from Radcliffe Property Management, a related
party. The lease agreement was signed in October 2020, after the
reporting date of 30 September 2020, and so the Group did not
recognise a right-of-use asset or lease liability in the year ended
30 September 2020.
On review, the Group had been given control of the asset prior
to the reporting date and, although the lease agreement had not
been signed, terms had been agreed. The Group has therefore made an
adjustment to recognise the lease in the statement of financial
position at the reporting date. A right-of-use asset of GBP3.1
million has been recorded as at 30 September 2020 with a
corresponding lease liability of GBP3.2 million. Depreciation of
GBP0.1 million and interest of GBP0.1 million have been charged to
the income statement and are presented within administrative
expenses and net finance costs respectively.
C Recognition of revenue on delivery of items
The Group has previously recognised revenue on dispatch of goods
from the Group's warehouses. On review, management believe that
control is only passed to the customer on delivery of items. As a
result of this change in policy, an adjustment has been made for
the year ended 30 September 2020.
Revenue recognised has been reduced by GBP2.3 million, with a
corresponding increase of GBP2.3 million in the Group's contract
liability. Offsetting this was GBP1.6 million of revenue now
recognised in the year ended 30 September 2020 for which an
adjustment was made to the opening statement of financial position.
The total impact to revenue of this change in policy was therefore
a reduction in revenue of GBP0.7 million.
The reduction in revenue has an associated reduction in cost of
sales. Cost of sales was reduced by GBP1.3 million, with a
corresponding increase in inventory. Offsetting this was GBP0.9
million of cost of sales now recognised in the year ended 30
September 2020, for which an adjustment was made to the opening
statement of financial position. The total impact to cost of sales
of this change in policy was therefore a reduction of GBP0.4
million.
D Inventory adjustments
On review, the Group has identified some differences between the
financial statements and the stock listing as at 30 September 2020
along with misstatements in relation to purchase cut-off and the
recognition of import duties. The net result of these differences
is an increase to inventory of GBP0.3 million, an increase in cost
of sales of GBP0.2 million and an increase to trade payables of
GBP0.5 million.
E Adjustment to deferred costs recognised in other
receivables
The Group had deferred costs of GBP2.7 million in the year ended
30 September 2020. On review, these costs should have been
recognised within cost of sales in the year ended 30 September
2020. An adjustment has therefore been made to reduce inventory by
GBP2.7 million, with a corresponding increase in cost of sales.
Offsetting this is a GBP1.3 million reduction in cost of sales
as a result of the corresponding adjustment to the year ended 30
September 2019.
F Reclassification of receivables
The Group has reclassified GBP0.2 million to trade receivables
relating to a debtor balance with a customer. This balance had been
offset against the Group's 'contract liability' in the financial
statements for the year ended 30 September 2020.
G Recognition of an accrual for returns
On review, the Group believes that it is necessary to recognise
an accrual for returns made after the reporting date that related
to sales made during the period. This change has had an impact on
the statement of financial position as at 30 September 2020.
The Group has recognised an adjustment to increase the returns
accrual by GBP1.0 million and a right-of-return asset of GBP0.4
million has been recorded within trade and other receivables. After
considering the impact of the adjustment made to the statement of
financial position as at 30 September 2019, this adjustment results
in a reduction in revenue of GBP0.5 million and gross profit of
GBP0.3 million.
H Recognition of a provision for assurance warranties
The Group has historically not provided for any potential
liability relating to assurance-type warranties offered to
customers. On review, the Group believes it is necessary to provide
for these potential liabilities. A total of GBP0.1 million was
charged to the income statement in the year in respect of this
provision.
I Other adjustments to revenue
On review, the Group identified a contract liability of GBP0.1
million of revenue recognised in the year ended 30 September 2019
which should have been deferred to the year ended 30 September
2020. An adjustment has been made to recognise an additional GBP0.1
million of revenue in the year ended 30 September 2020.
The Group recognised an amount of GBP0.1 million relating to
supplier promotions as revenue in the year ended 30 September 2020.
On review, this amount has been reclassified as 'Other operating
income'.
J Reclassification of marketing costs
The Group classified marketing costs as cost of sales in the
year ended 30 September 2020. On review, the Group believes that
costs relating to marketing are an administrative expense and not
directly attributable to the goods sold. Marketing costs of GBP52.1
million have therefore been reclassified from cost of sales to
administrative expenses.
K Tax impact of adjustments
The impact of the adjustments proposed decreases the income tax
expense by GBP0.5 million. The corporation tax liability decreased
by GBP0.9 million.
Statement of cash flows for the year ended 30 September 2020
Previously reported 30 Impact of adjustments Restated 30 September 2020
September 2020 GBPm GBPm GBPm
------------------------------ ------------------------------ ---------------------- ---------------------------
Cash generated from operating
activities 27.1 3.8 30.9
Income tax paid (6.5) - (6.5)
------------------------------- ------------------------------ ---------------------- ---------------------------
Net cash generated from
operating activities 20.6 3.8 24.4
Net cash used in investing
activities (2.6) (3.8) (6.4)
Net cash used in financing
activities (10.2) - (10.2)
------------------------------- ------------------------------ ---------------------- ---------------------------
Net increase in cash and cash
equivalents 7.8 - 7.8
------------------------------- ------------------------------ ---------------------- ---------------------------
Cash and cash equivalents at
the start of the year 2.7 - 2.7
Cash and cash equivalents at
the end of the year 10.5 - 10.5
------------------------------- ------------------------------ ---------------------- ---------------------------
The cash flows for operating activities and investing activities
have been restated in relation to 30 September 2020. This is due to
cash flows relating to advances made to related parties being
incorrectly classified as operating cash flows instead of investing
cash flows. This has resulted in previously reported total cash
outflows from investing activities increasing by GBP3.8 million and
total cash inflows from operating activities decreasing by GBP3.8
million. This has no effect on the financing cashflows, total cash
flows or the cash position at 30 September 2020.
Reconciliation of opening equity - Statement of financial
position as at 01 October 2019
Previously reported 1 Impact of adjustments Restated 1 October 2019
Notes October 2019 GBPm GBPm GBPm
----------------------------- ------- ---------------------------- ---------------------- ------------------------
Non-current assets
Intangible assets 1.8 - 1.8
Property, plant and equipment 0.5 - 0.5
Right-of-use assets 3.5 - 3.5
5.8 - 5.8
Current assets
Inventories A, B 16.4 1.9 18.3
Trade and other receivables C, D 6.2 (1.0) 5.2
Tax recoverable G 0.2 (0.2) -
Cash and cash equivalents 2.7 - 2.7
-------------------------------------- ---------------------------- ---------------------- ------------------------
25.5 0.7 26.2
------------------------------------- ---------------------------- ---------------------- ------------------------
Current liabilities
Trade and other payables B, D (19.8) (1.4) (21.2)
Provision F - (0.1) (0.1)
Contract liability E (2.1) (1.7) (3.8)
Lease liabilities (0.5) - (0.5)
Corporation tax G (0.9) 0.6 (0.3)
(23.3) (2.6) (25.9)
------------------------------------- ---------------------------- ---------------------- ------------------------
Non-current liabilities
Lease liabilities (3.3) - (3.3)
(3.3) - (3.3)
Net assets 4.7 (1.9) 2.8
Equity attributable to the
owners of the Company
Share capital - - -
Retained earnings 4.7 (1.9) 2.8
Total equity 4.7 (1.9) 2.8
-------------------------------------- ---------------------------- ---------------------- ------------------------
A Recognition of revenue on delivery of items
The Group has previously recognised revenue on dispatch of goods
from the Group's warehouses. On review, management believes that
control is only passed to the customer on delivery of items. As a
result of this change in policy, an adjustment has been made for
the year ended 30 September 2019.
Revenue recognised has been reduced by GBP1.6 million, with a
corresponding increase of GBP1.6 million in the Group's contract
liability. The reduction in revenue has an associated reduction in
cost of sales. Cost of sales was reduced by GBP0.9 million, with a
corresponding increase in inventory.
B Inventory adjustments
On review, the Group has identified some differences between the
financial statements and the stock listing as at 30 September 2019,
along with misstatements in relation to purchase cut-off and the
recognition of import duties. The net result of these differences
is an increase to inventory of GBP1.0 million and an increase to
trade payables of GBP0.8 million.
The Group had classified a balance of GBP0.1 million that
related to goods in transit as a prepayment in the year ended 30
September 2019. An adjustment has been made to increase inventory
by GBP0.1 million, with a corresponding decrease in trade and other
receivables.
C Adjustment to deferred costs recognised in other
receivables
The Group had deferred costs of GBP1.3 million in the year ended
30 September 2019. On review, these costs should have been
recognised within cost of sales in the year ended 30 September
2019. An adjustment has therefore been made to reduce other
receivables by GBP1.3 million, with a corresponding increase in
cost of sales.
D Recognition of an accrual for returns
On review, the Group believes that it is necessary to recognise
an accrual for returns made after the reporting date that related
to sales made during the period. The change has had an impact on
the statement of financial position as at 30 September 2019.
The Group has recognised an adjustment to increase the returns
accrual by GBP0.5 million and a right-of-return asset of GBP0.2
million has been recorded within trade and other receivables.
E Contract liability adjustment
On review, the Group identified GBP0.1 million of revenue
recognised in the year ended 30 September 2019 which should have
been deferred. An adjustment has therefore been made to increase
the contract liability by GBP0.1 million, with the corresponding
reduction being made to revenue.
F Recognition of a provision for assurance warranties
The Group has historically not provided for any potential
liability relating to assurance-type warranties offered to
customers. On review, the Group believes it is necessary to provide
for these potential liabilities. The result of this change on the
statement of financial position as at 30 September 2019 is an
increase of GBP0.1 million.
G Tax impact of adjustments
The corporation tax liability decreased by GBP0.4 million.
Judgements in applying accounting policies
Intangible assets
Intangible assets include capitalised internal salaries and
third-party costs for computer software development. A certain
proportion of the total costs are capitalised, as they relate to
development costs, whilst the remaining costs are deemed to be
maintenance costs and are expensed to the statement of
comprehensive income. The proportion is calculated using a
combination of management's best estimate and information provided
by the third party.
Revenue cut-off
The Group's management information systems are configured to
recognise revenue upon dispatch of the inventory items from the
Group's warehouse, which may not be aligned to when control has
transferred to the customer. Management therefore performs an
assessment in order to capture items that may have been dispatched
from the Group's warehouse but not delivered by the reporting date,
and subsequently defers the recognition of revenue and associated
costs into the following year. This gives rise to deferred income,
which is recognised as a contract liability, and associated
inventory in the consolidated statement of financial position. The
assessment performed by management includes assumptions, which
management believes are reasonable, in order to identify items that
fit the criteria for deferral. Management limits the review to a
fixed number of distributors and extrapolates the shipment delay
identified in the distributors tested to the remaining
distributors.
Share-based payments
Share-based payment arrangements in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions. The fair value of services received in return for
share options is calculated with reference to the fair value of the
award on the date of grant. A Black-Scholes model has been used
where appropriate to calculate the fair value and the Directors
have therefore made estimates with regard to the inputs to that
model and the period over which the share award is expected to vest
(note 19) of the consolidated Group financial statements.
On 15 April 2020, 845 ordinary A shares were issued at a price
of GBP0.10 per share, which is the nominal value of the shares. Of
the 845 shares issued, 800 of the A ordinary shares were issued to
the existing shareholders by way of bonus issue so as not to dilute
their existing holding. These shares are considered outside the
scope of IFRS 2, on the basis that these shareholders do not
receive any additional value for their shares. This is considered
to be a key judgement.
Judgements in applying accounting policies
Refund liability
The refund liability that is recognised within the historical
financial information relates to the obligation to refund some or
all of the consideration received from a customer. The liability is
measured at the amount the Group ultimately expects it will have to
return to the customer. The refund liability therefore requires
management to estimate the amount expected to be returned to
customers after the reporting date. The refund liability is
estimated using historical rates of the level of refunds relative
to revenue. The table below shows the percentage of average
quarterly sales in the period and the impact that increasing the
refund rate by 1% of quarterly sales would have on the consolidated
statement of comprehensive income.
2020
2021 (restated)
----------------------------------------------------------------------------- ---- ------ ------------
Refund liability (GBPm) 0.9 1.0
Revenue (GBPm) 268.8 208.7
Refund liability % average quarterly sales 1.3% 1.9%
Impact of increasing the refund rate by 1% of quarterly sales on PBT (GBPm) (0.7) (0.5)
----------------------------------------------------------------------------------- ------ ------------
Warranty provision
The Group provides for the cost expected to be incurred in order
to replace damaged or faulty items that existed at the time of
sale. The provision related to these assurance-type warranties are
recognised when the product is sold. Initial recognition is based
on historical experience.
The table below shows the percentage of average quarterly sales
in the period and the impact that increasing the warranty rate by
0.5% of quarterly sales would have on profit before tax
('PBT').
2020
2021 (restated)
-------------------------------------------------------------------------------------- ---- ------ ------------
Warranty provision (GBPm) 0.1 0.2
Revenue (GBPm) 268.8 208.7
Warranty provision % average quarterly sales 0.2% 0.4%
Impact of increasing the warranty provision by 0.5% of quarterly sales on PBT (GBPm) (0.3) (0.3)
-------------------------------------------------------------------------------------------- ------ ------------
3. Segmental information
IFRS 8 'Operating Segments' requires the Group to determine its
operating segments based on information which is provided
internally. Based on the internal reporting information and
management structures within the group, it has been determined that
there is only one operating segment, being the Group, as the
information reported includes operating results at a consolidated
Group level only (the 'Operating group'). There is also considered
to be only one reporting segment, which is the Group, the results
of which are shown in the consolidated statement of comprehensive
income.
Management has determined that there is one operating and
reporting segment based on the reports reviewed by the Senior
Leadership Team ('SLT') which is the chief operating decision-maker
('CODM'). The SLT is made up of the Executive Directors and Key
Management and is responsible for the strategic decision-making of
the Group.
Adjusted EBITDA
Operating costs, comprising administrative expenses, are managed
on a Group basis. The SLT measures the overall performance of the
Operating group by reference to the following non-GAAP measure:
-- Adjusted EBITDA, which is EBITDA (earnings before interest,
tax, depreciation and amortisation) less exceptional items and IFRS
2 charges in respect of share-based payments along with associated
national insurance.
This adjusted profit measure is applied by the SLT to understand
the earnings trends of the Operating group and is considered an
additional, useful measure under which to assess the true operating
performance of the Operating group.
In addition to annual bonuses which are linked to the Operating
group's financial performance, the Operating group has implemented
a number of longer-term share-based payment incentives linked to
changes in ownership of the Operating group rather than the
achievement of individual or Company specific financial performance
targets.
The Directors believe that these items and adjusted measures of
performance should be separately disclosed in order to assist in
the understanding of financial performance achieved by the
Operating group and for consistency with prior years.
2020
2021 (restated)
GBPm GBPm
------------------------------------------------ ---- ------ ------------
Operating profit 20.0 24.0
Depreciation of property, plant and equipment 0.6 0.3
Depreciation of right-of-use assets 0.8 0.6
Amortisation 1.6 1.3
Exceptional items 9.4 -
Share-based payments (including associated NI) 7.7 -
------------------------------------------------ ---- ------ ------------
Adjusted EBITDA 40.1 26.2
------------------------------------------------------ ------ ------------
4. Revenue
An analysis of revenue by class of business is as follows:
2020
2021 (restated)
GBPm GBPm
---------- ---- ------ ------------
Online 267.9 207.7
Showroom 0.9 1.0
268.8 208.7
--------------- ------ ------------
All revenue arose within the United Kingdom.
5. Operating profit
Expenses by nature including exceptional items:
2020
2021 (restated)
GBPm GBPm
----------------------------------------------------------------- ---- ------ ------------
Employee costs (excluding share-based payments) 12.6 8.3
Share-based payments 7.7 -
Agency and contractor costs 1.1 1.1
Marketing costs 69.7 52.2
Depreciation of property, plant and equipment (note 11) 0.6 0.3
Depreciation of right-of-use assets (note 12) 0.9 0.6
Amortisation charge (note 10) 1.6 1.3
Loss/(gain) on foreign exchange 0.1 (0.7)
Other costs 16.2 5.1
----------------------------------------------------------------------- ------ ------------
Total administrative expenses 110.5 68.2
Share-based payments (note 19) (7.7) -
Included within exceptional items (note 6) (9.4) -
----------------------------------------------------------------- ---- ------ ------------
Total administrative expenses before separately disclosed items 93.4 68.2
----------------------------------------------------------------------- ------ ------------
6. Exceptional items
2021 2020
GBPm GBPm
---------- ------ ------
IPO costs 9.4 -
---------- ------ ------
IPO costs relate to costs incurred in respect of the Group's
listing on AIM in June 2021.
7. Taxation
2020
2021 (restated)
GBPm GBPm
-------------------------------------------- ---- ------ ------------
Corporation tax
Current tax on profits for the year 5.4 4.5
Adjustments in respect of previous periods - (0.6)
-------------------------------------------------- ------ ------------
Total current tax 5.4 3.9
-------------------------------------------------- ------ ------------
Deferred tax
Adjustments in respect of previous periods - 0.1
-------------------------------------------------- ------ ------------
Total deferred tax - 0.1
-------------------------------------------------- ------ ------------
Taxation on profit 5.4 4.0
-------------------------------------------------- ------ ------------
Factors affecting tax charge for the year
The tax assessed for the period is higher (2020: lower) than the
standard rate of corporation tax in the UK of 19% (2020: 19%). The
differences are explained below:
2020
2021 (restated)
GBPm GBPm
------------------------------------------------------------------------------------------ ---- ------ ------------
Profit on ordinary activities before tax 19.7 23.7
------------------------------------------------------------------------------------------------ ------ ------------
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of
19% (2020: 19%) 3.7 4.5
Effects of:
Expenses not deductible for tax purposes 1.4 -
Share options 0.3 -
Adjustments to tax charge in respect of prior periods - (0.5)
------------------------------------------------------------------------------------------------ ------ ------------
Total tax charge for the year 5.4 4.0
------------------------------------------------------------------------------------------------ ------ ------------
Taxation on items taken directly to equity was a credit of
GBP0.7m (2020: GBPnil) relating to tax on share-based payments.
Factors that may affect future tax charges
The rate of corporation tax in the UK throughout the period was
19%. Changes to the UK corporation tax rates were substantively
enacted as part of the Finance Act 2021 on 24 May 2021. The rate
applicable from 1 April 2023 will increase from 19% to 25%.
Deferred taxes at the reporting date have been measured using these
enacted tax rates.
Tax recoverable
Tax recoverable represents overpaid corporation tax and Section
455 tax which has been paid and is to be reclaimed.
8. Dividends
2021 2020
GBPm GBPm
---------------- ------ ------
Dividends paid 14.9 9.5
----------------- ------ ------
Prior to the Group restructure, ordinary dividends of GBP14.9
million (2020: GBP9.5 million) were paid in respect of the year
ended 30 September 2020 to the shareholders of VIPSO Limited.
Certain shareholders have waived their right to receive dividends
and therefore the dividends paid are not based on the total number
of ordinary shares in issue at the time. No dividends were paid to
the shareholders of Victorian Plumbing Group plc during the year
ended 30 September 2021.
9. Earnings per share
Basic and diluted earnings per share
Basic earnings per share ('EPS') is calculated by dividing the
profit for the period attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares
outstanding during the year.
As a consequence of a share-for-share exchange on 27 May 2021
(note 17) in preparation for the IPO, these consolidated financial
statements reflect the continuation of the pre-existing Group,
headed by VIPSO Ltd. In order for EPS to be comparable year on
year, the shares allotted and vested at Admission have been used to
calculate basic EPS for the year ended 30 September 2020 and for
the period between 1 October 2020 and Admission on 22 June
2021.
Diluted EPS is calculated by dividing the profit attributable to
ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the
number of incremental ordinary shares, calculated using the
treasury stock method, that would be issued on conversion of all
the dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in
the EPS calculations:
Weighted average number of ordinary shares Total earnings
GBPm Pence per share
------------------------------ ------------------------------------------- --------------- ----------------
Year ended 30 September 2021
Basic EPS 267,781,231 14.3 5.3
Diluted EPS 315,755,339 14.3 4.5
Year ended 30 September 2020
Basic EPS 265,559,733 19.7 7.4
Diluted EPS 265,559,733 19.7 7.4
------------------------------- ------------------------------------------- --------------- ----------------
The number of shares in issue at the time of listing on 22 June
2021 is reconciled to the basic and diluted weighted average number
of shares below:
Weighted average number of shares
--------------------------------------------------------------------------- ----------------------------------
Number of ordinary shares in issue immediately prior to IPO 305,943,729
Weighted effect impact of shares issued for primary offering 1,237,269
Weighted effect of ordinary shares issued for share based payments 3,501,409
Weighted effect of shares issued but unvested (42,901,176)
Weighted average number of shares for basic EPS 267,781,231
Dilutive impact of unvested shares in relation to restricted share awards 47,970,764
Impact of ordinary shares held in ESOT 3,344
---------------------------------------------------------------------------- ----------------------------------
Weighted average number of shares for diluted EPS 315,755,339
---------------------------------------------------------------------------- ----------------------------------
The average market value of the Group's shares for the purposes
of calculating the dilutive effect of share-based incentives was
based on quoted market prices for the period during which the
share-based incentives were outstanding.
Adjusted earnings per share ('Adjusted EPS')
Adjusted basic and diluted earnings per share figures are
calculated by dividing adjusted profit after tax for the year by
the weighted average number of shares in issue (as set out
above).
2020
2021 (restated)
GBPm GBPm
--------------------------------------------- ---- ------ ------------
Profit for the year 14.3 19.7
Exceptional items 9.4 -
Share-based payments 7.7 -
Tax effect (1.9) -
--------------------------------------------- ---- ------ ------------
Total adjusted profit for the year 29.5 19.7
--------------------------------------------------- ------ ------------
Adjusted basic earnings per share (pence) 11.0 7.4
Adjusted diluted earnings per share (pence) 9.3 7.4
--------------------------------------------------- ------ ------------
10. Intangible assets
Computer software
GBPm
--------------------------------- ------------------
Cost
At 30 September 2019 3.7
Additions (restated) 2.0
---------------------------------- ------------------
At 30 September 2020 (restated) 5.7
Additions 1.8
---------------------------------- ------------------
At 30 September 2021 7.5
---------------------------------- ------------------
Accumulated amortisation
At 30 September 2019 1.9
Charge for the year 1.3
---------------------------------- ------------------
At 30 September 2020 3.2
Charge for the year 1.6
---------------------------------- ------------------
At 30 September 2021 4.8
---------------------------------- ------------------
Net book value
At 30 September 2019 1.8
At 30 September 2020 (restated) 2.5
At 30 September 2021 2.7
---------------------------------- ------------------
Computer software comprises both internal salaries and external
development capitalised in relation to the Group's bespoke
operational software. The Group capitalised internal salaries of
GBP1.2 million in the year ended 30 September 2021 (2020: GBP0.6
million) for development of computer software.
For the year to 30 September 2021, the amortisation charge of
GBP1.6 million (2020: GBP1.3 million) has been charged to
administrative expenses in the income statement. At 30 September
2021, there were no software and website development costs
representing assets under construction (2020: GBPnil).
11. Property, plant and equipment
Fixtures Office
Leasehold improvements Plant and machinery and fittings equipment Total
GBPm GBPm GBPm GBPm GBPm
-------------------------- ----------------------- -------------------- -------------- ----------- ------
Cost
At 30 September 2019 - 0.5 0.9 0.6 2.0
Additions - 0.2 0.1 0.3 0.6
-------------------------- ----------------------- -------------------- -------------- ----------- ------
At 30 September 2020 - 0.7 1.0 0.9 2.6
Additions 0.1 0.7 0.2 0.5 1.5
-------------------------- ----------------------- -------------------- -------------- ----------- ------
At 30 September 2021 0.1 1.4 1.2 1.4 4.1
-------------------------- ----------------------- -------------------- -------------- ----------- ------
Accumulated depreciation
At 30 September 2019 - 0.3 0.8 0.4 1.5
Charge for the year - 0.1 0.1 0.1 0.3
-------------------------- ----------------------- -------------------- -------------- ----------- ------
At 30 September 2020 - 0.4 0.9 0.5 1.8
Charge for the year - 0.3 0.1 0.2 0.6
-------------------------- ----------------------- -------------------- -------------- ----------- ------
At 30 September 2021 - 0.7 1.0 0.7 2.4
-------------------------- ----------------------- -------------------- -------------- ----------- ------
Net book value
At 30 September 2019 - 0.2 0.1 0.2 0.5
At 30 September 2020 - 0.3 0.1 0.4 0.8
At 30 September 2021 0.1 0.7 0.2 0.7 1.7
-------------------------- ----------------------- -------------------- -------------- ----------- ------
12. Right-of-use assets
Right-of-use assets
GBPm
--------------------------------- --------------------
Cost
At 30 September 2019 5.0
Additions (restated) 3.1
---------------------------------- --------------------
At 30 September 2020 (restated) 8.1
Additions 0.6
Modifications (0.4)
Disposals (0.1)
---------------------------------- --------------------
At 30 September 2021 8.2
---------------------------------- --------------------
Accumulated depreciation
At 30 September 2019 1.5
Charge for the year 0.6
---------------------------------- --------------------
At 30 September 2020 2.1
Charge for the year 0.9
On disposals (0.1)
---------------------------------- --------------------
At 30 September 2021 2.9
---------------------------------- --------------------
Net book value
At 30 September 2019 3.5
At 30 September 2020 (restated) 6.0
At 30 September 2021 5.3
---------------------------------- --------------------
During the year the Group reassessed the likelihood of executing
the termination option on one of its properties. It is now deemed
likely that the termination option will be exercised and as a
result this represents a modification under IFRS 16. The
right-of-use asset was decreased by GBP0.4 million to reflect the
value of the asset after the modification and the corresponding
lease liability reduced by GBP0.4 million.
13. Trade and other receivables
2020
2021 (restated)
GBPm GBPm
--------------------------------- ---- ------ ------------
Trade receivables 2.3 1.9
Amounts owed by related parties - 5.9
Other receivables - 0.2
Right-of-return asset 0.3 0.3
Accrued income 0.9 1.0
Prepayments 1.4 0.7
--------------------------------------- ------ ------------
4.9 10.0
-------------------------------------- ------ ------------
The Group provides against trade receivables using the
forward-looking expected credit loss model under IFRS 9. An
impairment analysis is performed at each reporting date. Trade
receivables, accrued income, amounts owed by related parties and
other receivables expected credit losses have been reviewed by
management and have been determined to have an immaterial impact on
these balances.
14. Trade and other payables
2020
2021 (restated)
GBPm GBPm
------------------------------------ ---- ------ ------------
Trade payables 23.5 21.7
Other taxation and social security 8.8 3.7
Refund liability 0.9 1.0
Other payables 1.2 0.7
Accruals 1.6 1.0
------------------------------------------ ------ ------------
36.0 28.1
----------------------------------------- ------ ------------
15. Lease liabilities
Lease liability
GBPm
--------------------------------- ----------------
At 30 September 2019 3.8
Additions (restated) 3.1
Interest expense 0.2
Lease payment (0.7)
---------------------------------- ----------------
At 30 September 2020 (restated) 6.4
Additions 0.6
Modifications (0.4)
Interest expense 0.3
Lease payment (1.1)
---------------------------------- ----------------
At 30 September 2021 5.8
---------------------------------- ----------------
During the year the Group reassessed the likelihood of executing
the termination option on one of its properties. It is now deemed
likely that the termination option will be exercised and as a
result this represents a modification under IFRS 16. The
right-of-use asset was decreased by GBP0.4 million to reflect the
value of the asset after the modification and the corresponding
lease liability reduced by GBP0.4 million.
The Group had total cash outflows for leases of GBP1.1 million
(2020: GBP0.7 million). The Group also had non-cash additions to
right-of-use assets and lease liabilities of GBP0.6 million (2020:
GBP3.1 million).
Lease liabilities as at 30 September were classified as
follows:
2021 2020
GBPm GBPm
------------- ------ ------
Current 0.9 0.7
Non-current 4.9 5.7
Total 5.8 6.4
-------------- ------ ------
16. Borrowings
2021 2020
GBPm GBPm
---------------------------------------------- ------ ------
Amounts drawn under revolving credit facility - -
Unamortised debt issue costs (0.1) -
(0.1) -
---------------------------------------------- ------ ------
On 7 June 2021, the Group signed into a new Revolving Credit
Facility (the 'RCF'). The RCF has total commitments of GBP10
million and a termination date of June 2024. The facility is
secured by a debenture dated 7 June 2021. Interest on the RCF is
charged at SONIA plus a margin of between 2.3% and 2.8% depending
on the consolidated leverage of the Group. A commitment fee of 40%
of the margin applicable to the RCF is payable quarterly in arrears
on unutilised amounts of the RCF. There is no requirement to settle
all, or part, of the debt earlier than the termination date. At 30
September 2021 the Group had not utilised the RCF.
Unamortised debt issue costs of GBP0.1 million (2020: GBPnil)
are included in prepayments (note 13).
17. Share capital
2021 2020
GBP GBP
---------------------------------------------------- -------- -----
Allotted, called up and fully paid
325,062,985 ordinary shares of 0.1p (2020: GBPnil) 325,063 -
Nil ordinary shares of GBP1.00 (2020: 800) - 800
Nil A ordinary shares of GBP0.10 (2020: 845) - 85
----------------------------------------------------- -------- -----
325,063 885
---------------------------------------------------- -------- -----
The share capital of the Group is represented by the share
capital of the parent company, Victorian Plumbing Group plc. The
Company was incorporated on 6 May 2021 to act as the holding
company of the Group. Prior to this the share capital of the Group
was represented by the share capital of the previous parent, VIPSO
Limited. The table below summarises the movements in share capital
during the year ended 30 September 2021.
GBP
------------------------------------------------------------- ---------
At 1 October 2020 885
Change in capital as a result of the Group restructure 410,365
Ordinary shares of 0.1p issued on Admission 11,260
Ordinary shares of 0.1p issued for the Share Incentive Plan 636
Cancellation of ordinary deferred shares of 0.1p (98,083)
-------------------------------------------------------------- ---------
At 30 September 2021 325,063
-------------------------------------------------------------- ---------
Victorian Plumbing Group plc was incorporated on 6 May 2021 and
issued one ordinary share of GBP1.45 at par.
On 27 May 2021 as part of the Group restructuring, the following
steps took place:
-- Victorian Plumbing Group plc issued 199,999,999 ordinary
shares of GBP1.45 and 211,250,000 A ordinary shares of GBP0.145 in
exchange for the entire share capital of VIPSO Limited.
-- The 200,000,000 of ordinary shares were sub-divided into
200,000,000 of 0.1p ordinary shares and 200,000,00 of GBP1.449
deferred ordinary shares.
-- The 211,250,000 of A ordinary shares were sub-divided into
211,250,000 A ordinary shares of 0.1p and 211,250,000 A ordinary
deferred shares of GBP0.144.
-- Victorian Plumbing Group plc undertook a capital reduction by
cancelling 200,000,000 ordinary deferred shares of GBP1.449 each
and 211,250,000 A ordinary deferred shares of GBP0.144 each. In
total, these shares had an aggregate nominal value of
GBP320,220,000.
On 22 June 2021, the date of Admission, the following steps took
place:
-- The 200,000,000 ordinary shares of 0.1p and 211,250,000 A
ordinary shares of 0.1p were consolidated to 313,166,698 new
ordinary shares of 0.1p and 98,083,302 new deferred ordinary shares
of 0.1p.
-- Victorian Plumbing Group plc cancelled the 98,083,302
ordinary deferred shares of 0.1p with an aggregate nominal value of
GBP98,083.
-- Victorian Plumbing Group plc issued 11,260,783 of 0.1p
ordinary shares at an aggregate nominal value of GBP11,260. Of the
shares issued 6,833,302 were to satisfy share awards and 4,427,481
for a primary issue. The issue raised gross proceeds of GBP11.6
million for the Company, or GBP11.2 million net of all fees
incurred. Share premium of GBP11.2 million has been recorded.
On 2 August 2021 the Company issued 635,504 ordinary shares of
0.1p at an aggregate nominal value of GBP636, which are held by the
Employee Share Option Trust (ESOT).
18. Own shares held
The Employee Share Option Trust purchases shares to fund the
Share Incentive Plan. At 30 September 2021, the trust held 635,504
(2020: nil) ordinary shares with a book value of GBP636 (2020:
GBPnil). The market value of these shares as at 30 September 2021
was GBP1.6 million (2020: GBPnil). During the year the ESOT
purchased 635,504 shares of the Company at a cost of GBP636,
representing 0.2% of issued share capital.
Number of shares GBP
---------------------------------------------------- ----------------- ----
ESOT shares reserve
Own shares held at 1 October 2020 - -
Shares acquired by the ESOT in relation to the SIP 635,504 636
----------------------------------------------------- ----------------- ----
Own shares held at 30 September 2021 635,504 636
----------------------------------------------------- ----------------- ----
On 27 July 2021, Victorian Plumbing Group plc issued 635,504
ordinary shares of 0.1p each to eligible employees in connection
with the Share Incentive Plan ('SIP'). On the same date, the
ordinary shares were acquired by the Employee Share Option Trust
('ESOT') at nominal value.
19. Share-based payments
During the year the Group operated two share plans being the
Share Incentive Plan ('SIP') and a Management Incentive Plan
('MIP'). In addition, both prior to and following Admission to AIM
in June 2021, the Group awarded shares to the Chairman and certain
members of Key Management which had restrictions placed against
them that bring the awards into the scope of IFRS 2.
All share-based incentives carry a service condition. Such
conditions are not taken into account in the fair value of the
service received. The fair value of services received in return for
share-based incentives is measured by reference to the fair value
of share-based incentives granted. The estimate of the fair value
of the share-based incentives is measured using the Black-Scholes
pricing model as is most appropriate for each scheme.
Sensitivity analysis has been performed in assessing the fair
value of the share-based incentives. There are no changes to key
assumptions that are considered by the Directors to be reasonably
possible, which give rise to a material difference in the fair
value of the share-based incentives.
The total charge in the year was GBP7.7m (2020: GBPnil) with a
Company charge of GBP0.7m (2020: GBPnil). This included associated
national insurance ('NI') at 13.8%, which management expects to be
the prevailing rate when the awards are exercised, and
apprenticeship levy at 0.5%, based on the share price at the
reporting date.
2021 2020
GBPm GBPm
----------------------------------------------------------------- ------ ------
Share Incentive Plan ('SIP') 0.1 -
A ordinary growth shares award - April 2020 0.4 -
Management incentive Plan award - December 2020 4.4 -
IPO restricted share awards 1.6 -
----------------------------------------------------------------- ------ ------
Total IFRS 2 charge 6.5 -
National insurance and apprenticeship levy on applicable schemes 1.2 -
----------------------------------------------------------------- ------ ------
Total charge 7.7 -
----------------------------------------------------------------- ------ ------
During the year, the Directors in office in total had gains of
GBP5.9m (2020: GBPnil) arising on the exercise of share-based
incentive awards.
Share Incentive Plan
The Group operates a Share Incentive Plan ('SIP') scheme that
was made available to all eligible employees following Admission to
AIM in June 2021. On 27 July 2021, all eligible employees were
awarded free shares valued at GBP3,600 each based on the closing
share price on 26 July 2021 of GBP2.67. A total of 635,504 shares
were awarded under the scheme, subject to a three-year service
period (the 'Vesting Period').
The SIP awards have been valued using the Black-Scholes model
and the resulting share-based payments charge spread evenly over
the Vesting Period. The SIP shareholders are entitled to dividends
over the Vesting Period. No performance criteria are applied to the
vesting of SIP shares. Fair value at the grant date was measured to
be GBP2.67.
2021 2020
number number
-------------------------------------------- --------- --------
Outstanding at 1 October 2020 - -
Shares awarded 635,504 -
Forfeited (58,772) -
-------------------------------------------- --------- --------
Outstanding at 30 September 2021 576,732 -
-------------------------------------------- --------- --------
Vested and outstanding at 30 September 2021 - -
-------------------------------------------- --------- --------
The total charge in the year, included in operating profit, in
relation to these awards was GBP0.1m (2020: GBPnil). The Company
charge for the year was GBPnil (2020: GBPnil).
A ordinary shares
On 15 April 2020 (the 'grant date'), 845 A ordinary shares in
VIPSO Ltd, the former ultimate parent company, were issued at a
price of GBP0.10 per share which was the nominal value of the
shares. Of the 845 shares issued, 800 of the A ordinary shares were
issued to the existing shareholders by way of bonus issue so as not
to dilute their existing holding. These 800 shares are considered
outside the scope of IFRS 2, on the basis that these shareholders
do not receive any additional value for their shares.
The remaining 45 A ordinary shares were awarded to certain
members of Key Management (together the 'A ordinary shareholders').
In order to realise value from the shares awarded, a participant
must remain employed until an 'Exit' event is achieved. The equity
value on 'Exit' must also be in excess of the equity hurdle which
has been set at GBP130 million. The 'Exit' requirement is a
non-market performance vesting condition and the hurdle amount is
considered to be a market-based performance condition.
The fair value of services received in return for shares awarded
is measured by reference to the fair value of the shares at the
date of the award. The fair value of the shares awarded has been
calculated with reference to a Black-Scholes pricing model.
The significant inputs into the model were:
-- a 1- to 5-year time frame for 'Exit'. Three scenarios were
modelled with equal probability of an 'Exit' after 1 year, 3 years
and 5 years. An average of the three scenarios was then
calculated;
-- an equity value of GBP99 million at the date of award;
-- an exercise price of GBPnil;
-- volatility of between 34% and 40%, depending on the expected
time frame to 'Exit'. The expected volatility is based on the
average annualised historic equity value volatility of comparable
companies over a period equal to the exit horizon;
-- a dividend yield of 0%; and
-- a risk-free rate of between 0.07% and 0.14% depending on the time period to 'Exit'.
The fair value of each share was determined to be GBP8,475 per
share. The resulting share-based payments charge was to be spread
evenly over the period between the award and the date at which an
'Exit' event occurs. No charge was recognised if an 'Exit' event
was not deemed to be probable as the performance vesting condition
would not be met.
On 27 May 2021 the Group undertook a reorganisation, through
which the A ordinary shareholders exchanged their shares for an
equivalent value in Victorian Plumbing Group plc. After all of the
steps relating to the reorganisation were executed, the A ordinary
shareholders had exchanged their 45 A ordinary shares in VIPSO Ltd
for 7,222,969 ordinary shares in Victorian Plumbing Group plc. The
share-for-share exchange does not represent a modification of the
award under IFRS 2 as the value of the award, and the related
service and performance conditions, remained unchanged.
On 11 June 2021 the A ordinary shareholders entered into a deed
(the 'deed'), which would become effective on Victorian Plumbing
Group plc's Admission to AIM, to modify the terms of the award. The
performance condition would no longer be relevant since an Exit
event would have already occurred. The service condition for the A
ordinary shareholders was modified so as to restrict the number of
shares that vest on Admission. The vesting profile of the remaining
shares (the 'restricted shares') was defined to be as follows:
-- 10% of the restricted shares will vest on the first anniversary of Admission;
-- 10% of the restricted shares will vest on the second anniversary of Admission;
-- 15% of the restricted shares will vest on the third anniversary of Admission;
-- 25% of the restricted shares will vest on the fourth anniversary of Admission; and
-- 40% of the restricted shares will vest on the fifth anniversary of Admission.
On 22 June 2021 Victorian Plumbing Group plc was admitted to
AIM, which was an Exit event under the terms of the award. On
Admission 1,059,369 shares vested. The deed agreed to by the A
ordinary shareholders took effect.
The execution of the deed represents a modification of the award
under IFRS 2. Management considered the fair value of the existing
awards in accordance with IFRS 2. The modification resulted in
additional vesting conditions and as a result the value of the
award decreased on modification. As the fair value of the award
decreased, the original grant date fair value was recognised over
the original vesting period (the date of the Exit event) in
accordance with IFRS 2.
2021
Number
------------------------------------------------------- ------------
Outstanding at 6 May 2021 (incorporation) -
Restricted shares awarded on share-for-share exchange 7,222,969
Vested (1,059,369)
-------------------------------------------------------- ------------
Outstanding and unvested 30 September 2021 6,163,600
-------------------------------------------------------- ------------
The total charge in the year, included in operating profit, in
relation to these awards was GBP0.4 million (2020: GBPnil). The
Company charge for the year was GBPnil (2020: GBPnil). The
restricted share awards outstanding at 30 September 2021 have a
weighted average remaining vesting period of 3.5 years.
Management Incentive Plan
An Executive Director was awarded share options under a
management incentive plan ('MIP') prior to Admission.
On 2 December 2020, VIPSO Ltd (the former ultimate parent
company of the Group) awarded eight nil cost ordinary share options
and nine nil cost A ordinary share options under the MIP. All of
the options awarded were to vest on the earlier of an 'Exit' event
or three years from the date of grant. Options would be forfeited
if the employee leaves the Group before the options vest, unless
under exceptional circumstances.
The fair value of services received in return for the share
options granted has been measured by reference to the fair value of
the options at the grant date. The fair value of the options has
been calculated with reference to a Black-Scholes pricing
model.
The significant inputs into the model were:
-- a 1- to 3-year time frame for exit. Three scenarios were
modelled with equal probability of an exit after 10 months, 1.8
years and 3 years. An average of the three scenarios was then
calculated;
-- an equity value of GBP453 million at the date of award;
-- an exercise price of GBPnil;
-- volatility of between 45% and 53% depending on the expected
timeframe to exit. The expected volatility is based on the average
annualised historic equity value volatility of comparable companies
over a period equal to the exit horizon;
-- a dividend yield of 0%; and
-- a risk-free rate of 0%.
The value of each ordinary share option was determined to be
GBP344,651 and each A ordinary share option has been determined to
be GBP184,993. The resulting share-based payments charge was to be
spread evenly over the period between the grant date and the
vesting date.
On 27 May 2021 the Group undertook a reorganisation, through
which the options granted under the MIP were converted to be
options over ordinary shares and ordinary deferred shares in
Victorian Plumbing Group plc. After all of the steps relating to
the reorganisation were executed, the participant of the MIP had
exchanged its eight ordinary shares and none A ordinary shares in
VIPSO Ltd for 3,219,948 ordinary share options in Victorian
Plumbing Group plc. The exchange does not represent a modification
of the award under IFRS 2 as the value of the award, and the
related service and performance conditions remained unchanged.
On 11 June 2021 the MIP participant entered into a deed ('the
MIP deed'), which would become effective on Victorian Plumbing
Group plc's Admission to AIM, to modify the terms of the award. All
of the options would convert when the performance condition was
satisfied (i.e. on Admission) resulting in the participant being
awarded ordinary shares. However, 30% of the shares would remain
restricted and subject to a service condition (the 'restricted
shares').
The vesting profile of the restricted shares was defined to be
as follows:
-- 30% of the restricted shares will vest on the first anniversary of Admission;
-- 30% of the restricted shares will vest on the second anniversary of Admission; and
-- 40% of the restricted shares will vest on the third anniversary of Admission.
On 22 June 2021 Victorian Plumbing Group plc was admitted to AIM
which was an Exit event under the terms of the award. The deed
agreed to by the MIP participants took effect.
On Admission the options converted to 3,219,948 ordinary shares
and 2,253,964, or 70%, of those shares vested at an average price
of GBP2.62.
The execution of the deed represents a modification of the award
under IFRS 2. Management considered the fair value of the existing
awards in accordance with IFRS 2. The modification resulted in
additional vesting conditions and as a result the value of the
award decreased on modification. As the fair value of the award
decreased, the original grant date fair value was recognised over
the original vesting period (the date of the Exit event) in
accordance with IFRS 2.
2021
Number
------------------------------------------------------- ------------
Outstanding at 6 May 2021 (incorporation) -
Restricted shares awarded on share-for-share exchange 3,219,948
Vested (2,253,964)
-------------------------------------------------------- ------------
Outstanding and unvested 30 September 2021 965,984
-------------------------------------------------------- ------------
The weighted average market value per ordinary share for the
restricted shares awarded under the MIP that vested in the year was
GBP2.62. The restricted share awards outstanding under the MIP at
30 September 2021 have a weighted average remaining vesting period
of 1.8 years.
The total charge in the year, included in operating profit, in
relation to these awards was GBP4.4m (2020: GBPnil). The Company
charge for the year was GBP0.1 million (2020: GBPnil).
IPO restricted share awards
During the year, the Chairman and certain members of Key
Management were granted restricted share awards. The restricted
share awards do not have a performance condition attached to them
but the extent to which they vest depends on a service condition
being satisfied. The restricted shares are forfeited if the
employee leaves the Group before the vesting date, unless under
exceptional circumstances.
On 22 June 2021, the date of Admission, 3,613,354 ordinary
shares in Victorian Plumbing Group plc were granted to the Chairman
and other Key Management personnel. Of the total number of shares
awarded, 208,664 vested immediately. The remaining 3,404,690
ordinary shares became restricted share awards with the following
vesting profile:
-- 569,477 of the restricted shares vest on the first anniversary of Admission;
-- 663,375 of the restricted shares vest on the second anniversary of Admission;
-- 663,375 of the restricted shares vest on the third anniversary of Admission;
-- 851,173 of the restricted shares vest on the fourth anniversary of Admission; and
-- 657,290 of the restricted shares vest on the fifth anniversary of Admission.
The fair value of the award was determined using a Black-Scholes
pricing model and was GBP2.62 per share. The resulting share-based
payments charge is being spread evenly over the period between the
grant date and the vesting date.
On 10 August 2021, an agreement was reached to award certain Key
Management 38,168 restricted ordinary shares in Victorian Plumbing
Group plc. The restricted shares would not be subject to a
performance condition, but the extent to which they vest depends on
a service condition being satisfied. The restricted shares are
forfeited if the employee leaves the Group before the vesting date,
unless under exceptional circumstances. Of the 38,168 restricted
shares awarded:
-- 19,084 (50%) restricted shares vest on 30 September 2022; and
-- 19,084 (50%) restricted shares vest on 30 September 2023.
The fair value of the award was determined using a Black-Scholes
pricing model and was GBP2.59 per share. The resulting share-based
payments charge is being spread evenly over the period between the
grant date and the vesting date.
Share price Fair value
at grant Employee Vesting Risk-free Dividend per
date contribution period rate yield Volatility restricted
Grant date GBP per share (years) % % % share
------------ ------------- ------------- -------------- -------------- -------------- ----------- -------------
22/06/2021 2.62 GBP0.001 5.0 - - - 2.62
22/06/2021 2.62 GBP0.001 4.0 - - - 2.62
10/08/2021 2.59 nil 2.1 - - - 2.59
------------ ------------- ------------- -------------- -------------- -------------- ----------- -------------
The number of restricted shares outstanding at 30 September 2021
was as follows:
2021
Number
----------------------------------------------- ----------
Outstanding at 6 May 2021 (incorporation) -
Awarded 3,651,522
Vested (208,664)
------------------------------------------------ ----------
Outstanding and unvested at 30 September 2021 3,442,858
------------------------------------------------ ----------
The weighted average market value per ordinary share for
restricted shares that vested in the year was GBP2.62. The IPO
restricted share awards outstanding at 30 September 2021 have a
weighted average remaining vesting period of 2.8 years.
The total charge in the year, included in operating profit, in
relation to these awards was GBP1.6m (2020: GBPnil). The Company
charge for the year was GBP0.6m (2020: GBPnil).
20. Cash generated from operating activities
2021 2020
(restated)
GBPm GBPm
--------------------------------------------------------- ---- ------ ------------
Cash flows from operating activities
Profit before taxation for the financial year 19.7 23.7
Adjustments for:
Amortisation of intangible assets (note 10) 1.6 1.3
Depreciation of property, plant and equipment (note 11) 0.6 0.3
Depreciation of right-of-use assets (note 12) 0.9 0.6
Share-based payments 7.7 -
Finance costs 0.3 0.3
Increase in inventories (9.4) (4.7)
Increase in receivables (0.8) (1.0)
Increase in payables 7.3 10.3
(Decrease)/increase in provisions (0.1) 0.1
--------------------------------------------------------------- ------ ------------
Cash generated from operating activities 27.8 30.9
--------------------------------------------------------------- ------ ------------
21. Post balance sheet events
There have been no events between the year-end date and the date
of this report which represent a reportable event after the
reporting period under IAS 10.
PRINCIPAL RISKS AND UNCERTAINTIES
RISK POTENTIAL IMPACT CHANGES IN THE YEAR
1. Macroeconomic Specific macroeconomic factors Over the past 12 months Brexit
trends and changes due to geopolitical and the Covid-19 pandemic
uncertainty can have an have provided challenges to
impact on how customers both our operations and those
behave and can also have of our supply chain. Although
an impact on our operations both issues have evolved from
and the operations of our 12 months ago, there is no
supply chain. In turn this increased risk to the Group.
could impact our overall
financial performance.
------------------------------------- --------------------------------------
2. Failure to Failure to innovate new We remain at the forefront
innovate and desirable products may impact of innovation in the sector
changes in consumer our ability to attract new and we have strengthened our
buying behaviour customers or retain our position through partnerships
existing customers. with additional well known
A failure to maintain and bathroom product brands.
enhance our customer journey Through the year we have innovated
in a manner that responds and launched several new products
to our customers' evolving across a number of our brands
needs could also have a with good levels of success.
material adverse effect We have adapted the consumer
on our financial performance. experience to make purchasing
easier and evolved our 'pay
later' proposition with our
partner Klarna to give consumers
a near real-time response
to their application for credit.
Overall, there has been no
change to the level of risk
in the year.
------------------------------------- --------------------------------------
3. Pandemic The Covid-19 pandemic has Our business was able to operate
caused unprecedented levels fully throughout the year,
of disruption to every aspect although at times this was
of the economy, our customers, at reduced capacity due to
our suppliers and the way isolation requirements in
we operate our business. relation to COVID-19. Our
There is a risk that further suppliers were also impacted
restrictions or a stricter from time to time by these
and more prolonged lockdown restrictions.
could adversely impact the The overall situation has
ability for our business improved from a year ago but
and our supply chain to there are still a significant
operate efficiently. number of infections in the
As an e-commerce business UK. There is a chance that
we benefitted from the acceleration additional measures could
of consumers towards online be brought in through the
retail. As restrictions winter months and so we have
lift there remains a risk determined there to be no
that consumer buying behaviour change in the level of risk.
reverts and the size of
the online market reduces.
------------------------------------- --------------------------------------
4. Brand and Our brand is one of our Our prompted brand awareness
reputation biggest assets. Failure has consistently increased
to maintain and protect over the last three years,
our brand, or negative publicity according to YouGov, and was
that affects our reputation, at 64% in February 2021 when
could diminish the confidence measured as part of our annual
that customers have in our brand health survey. Our bold,
products and the service differentiated and quirky
we provide, resulting in marketing content alongside
a reduction in revenue and our data-driven pay-per-click
profit. strategy helps us to stay
front-of-mind with consumers.
During the year we have maintained
our high Trustpilot score
at 4.3/5 despite the increase
in order volumes.
There has been no overall
change to this risk in the
year.
------------------------------------- --------------------------------------
5. Cyber security As an e-commerce business, We continue to invest in our
and data protection we are reliant on our IT technology and infrastructure
infrastructure to continue team.
to operate. Any significant We have made substantial progress
downtime of our systems in re-platforming our website
would result in an interruption which, once completed, will
to the services we provide. increase our resilience and
A significant data breach, allow us to implement updates
whether as a result of our more easily.
own failures or a cyber We have migrated a number
attack, would lead to a of our applications to the
loss in confidence by both cloud, which increases the
customers and suppliers. resilience of our systems
This could result in reputational and the security of our data.
damage, loss of audience, During the year we performed
loss of revenue and potential an independent review of our
financial losses in the IT infrastructure and implemented
form of penalties. new solutions to mitigate
risks identified.
There has been no overall
change to this risk in the
year.
------------------------------------- --------------------------------------
6. Supply chain We are reliant on multiple As our business grows, we
third-party suppliers and increase our reliance on third
service providers throughout parties, most notably suppliers
the customer journey, from of our stock and the distribution
website to fulfilment, to channels we use to deliver
the product itself. This items to customers.
means that if there is a We have invested in our purchasing
failure on their part, we team in the year, which has
may suffer from a disruption increased the level of experience
to our operations and overall in the team and broadened
business. our relationships with suppliers.
Any failure in day-to-day We have also invested in a
operations risks negatively team based in China, which
impacting our ability to allows us to more readily
process or fulfil customer perform due diligence on suppliers.
orders, resulting in reduced We implemented an auditing
customer proposition, lost programme in the first half
opportunity and a loss of of the year with key Chinese
customer confidence. suppliers and have since audited
Our customers expect us 34 factories.
to provide quality products Different macroeconomic factors,
without compromising on such as Covid-19 and rising
the integrity of how they energy costs, have put significant
are produced. They want pressure on supply chains,
to feel confident about and these pressures continue
where their products come to exist at the date of this
from and know that the people report. The Group has mitigated
who make them are not being its risk through expanding
exploited. Failure to monitor its supplier base and increasing
our supply chain could lead inventory held, whilst we
to extensive reputational have increased retail prices
damage and ultimately financial to maintain gross profit margin.
loss. Our website relies on third-party
cloud infrastructure as well
as a number of other third-party
providers. Our increasing
traffic levels mean that a
drop in service from any of
these providers would have
a greater impact than it would
have previously.
Supply chain pressures have
increased in the year and
as such we recognise an increase
in this area.
------------------------------------- --------------------------------------
7. Increase The UK market for bathroom The competitive landscape
in competition products and accessories continues to develop, particularly
is highly competitive, particularly as more of the market moves
with respect to customer online. The impact of Covid-19
experience, price, quality, has resulted in some traditional
availability, product and store-based retailers reiterating
delivery options, as well their focus on providing an
as digital capabilities. omni-channel experience that
Increased competition could includes an online element.
lead to an increase in customer Our diversification into adjacent
acquisition costs. Competitors products and a larger focus
could also develop either on trade sales also results
a customer experience or in a wider competitor set.
products that we were unable Small increase in risk given
to replicate. All of these our expansion into adjacent
factors could impact our products and increasing focus
financial performance. on digital channels from traditional
offline retailers.
------------------------------------- --------------------------------------
8. Sustainability The focus on climate change The climate change crisis
and climate and sustainability is growing, is one of the biggest we have
change and is in the spotlight ever faced. The UN's IPCC
more now than ever before. published a report in August
We recognise that we need 2021 that reiterated the ever
to play our part in combating increasing and irreversible
climate change and if we impact human activity is having
fail to do this, we risk on our climate. The report
adversely impacting our warned that time is running
brand and reputation. out to cut emissions and called
on governments, businesses
and individuals to do their
part in ensuring the goals
of the Paris climate change
agreement are met. As such
we have recognised an increased
level of risk.
------------------------------------- --------------------------------------
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END
FR KVLFBFLLLFBX
(END) Dow Jones Newswires
December 09, 2021 02:00 ET (07:00 GMT)
Victorian Plumbing (LSE:VIC)
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